30Jan
A new Tax Act Implementing the EU Tax Merger Directive into Belgian law was published in the Belgian Official Gazette on the 12th January and came into force immediately.
The act introduces a tax-free regime for cross-border reorganisations. In addition, it also brings the existing tax provisions applicable to internal reorganizations in line with the EU Merger Directive. Most provisions are applicable as of the date of publication.
The EU Merger Directive of July 23, 1990 (as amended by the EU Directive of February 17, 2005) provides for a tax-neutral regime for cross-border reorganizations such as mergers, demergers, partial demergers, share-for-share transactions, contributions of assets and transfers of registered offices. Tax neutrality is provided both at the level of the companies involved in the reorganisation as well as in the hand of their shareholders.
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Tags: acquisition, cross-border, merger, Reorganisation, Tax, Transactions
23Jan
While fair value is the standard valuation basis for the measurement of assets and liabilities in the preparation of balance sheet following an acquisition, the new IFRS 3 (IFRS 3 revised or IFRS 3R) requests an even wider use of the notion of fair value. Moreover, IFRS 3R requires the amount of goodwill to be fixed at the date at which the control is obtained.
Consequently, a change in fair value subsequent to the acquisition date will not result in an adjustment to goodwill as with the current version of IFRS 3, even in a buyout context (subject to a 12-month period allowed for finalising the business combination accounting).
Another impact of IFRS 3R will be the rise in number and complexity of valuations to be performed when acquiring new businesses. Indeed, the fair value measurement has been expanded to include contingent considerations (e.g. earn-out clauses), whether probable at the acquisition date or not. The fair value measurement has also been expanded to include re-assessment and potential reclassification of some financial instruments.
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Tags: fair value, purchase price allocation, valuations
14Jan
The French Senate has adopted an amendment to the Draft Finance Act for 2009 (article 4bis of the DFA) for the purpose to address the tax treatment of carried interest shares granted to FCPR (Fonds Communs de Placement à Risque) and SCR (sociétés de capital à risque) managers.
Subject to any possible amendments, the proposed new tax regime for carried interest shares would apply to FCPRs and SCRs set up as from January 1st, 2009, and to shares/rights issued as from this date.
Current tax regime
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Tags: carried interest, France, incentive, Private Equity
06Jan
Cross-border mergers are now regulated in Belgium further to the adoption by the Chamber of the Miscellaneous Provisions Act (the “Act”), which is aimed inter alia at implementing Directive 2005/56/EC on cross-border mergers of limited liability companies (the “Cross-border Directive”) into Belgian law. The Act entered into force on 26 June 2008.
Old Rules
Before the Act came into force, cross-border mergers were not organised under Belgian law. Legal writers were divided on the feasibility of cross-border mergers notwithstanding adoption of the Belgian Private International Law Code in 2004, which stipulates that mergers of legal entities are governed, for each of them, by the law of the State to which they belong before the merger. In a 13 December 2005 judgment known as the “Sevic judgment”, the European Court of Justice had also confirmed the principle of the freedom of movement and establishment of companies, allowing cross-border mergers[1], but the effects of such a merger remained uncertain under Belgian law.
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Tags: companies code, cross-border, M&A, merger
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